Vintage Nintendo Game Boy Game characters seen for sale during London Film and Comic Con 2019 at Olympia London on July 28, 2019 in London, England.
Ollie Millington | Getty Images Entertainment | Getty Images
Shares of Japanese gaming firm Nintendo slipped on Wednesday after the company reported a 10% drop in its quarterly profit the day before.
By the end of the trading day in Tokyo on Wednesday, Nintendo’s stock was down 1.21%.
The slide came after Nintendo reported Tuesday that its operating profit for the three months through June was 27.4 billion yen (approx. $252.41 million), way off the 40 billion yen average of 10 analyst estimates compiled by Refinitiv.
Earlier in the trading day, when the stock had tumbled more than 3%, one analyst told CNBC that the market was “overreacting” to Nintendo’s earnings miss.
“The stock market, you know, typically overreacts to bad or also to good … Nintendo news,” Serkan Toto, CEO of game industry consultancy Kantan Games, told CNBC’s “Squawk Box” on Wednesday.
“”The quarter was not good for Nintendo but I don’t think that it’s as bad as the current stock price … is showing it,” Toto said.
Commenting on Nintendo’s quarterly performance, Toto said year-over-year sales of the Switch console increased despite the quarter being “almost devoid” of big game releases. That lack of major titles, he added, was “one of the reasons why the numbers were not as good as they … could’ve been.”
Earlier in June, Nintendo announced it was delaying the launch of the latest installment of its “Animal Crossing” franchise, a highly anticipated release. Originally scheduled to be released later in 2019, it has since been pushed back to March 2020.
Switch Lite may be a ‘mega hit’
On Tuesday, the company also maintained its full-year sales forecast of 18 million units of its flagship Switch video game console for the year ending March.
Sales numbers for the Switch — a hybrid console that allows gamers to play both on the go or while connected to a screen at home — are closely watched by investors due to the large proportion they contribute to Nintendo’s overall financials.
Looking ahead, Nintendo is also set to launch a cheaper version of Switch with fewer features — called the Switch Lite — in September, though no sales forecast was provided for the new device.
Asked about the upcoming launch of the Switch Lite, Toto said the device is likely to be a “mega hit on the market.”
To illustrate his point, he cited preorders for the device when they began on Amazon in the U.S., with a limit for all models being hit within the first hour.
“The initial reaction I think shows that, you know, there’s actually demand … for the Switch Lite,” Toto said.
— Reuters contributed to this report.
